Hyundai Executive Questioned

SEOUL, South Korea -- Prosecutors said Wednesday they had questioned a top Hyundai Motor executive in a widening probe into suspicions the largest South Korean automaker created slush funds to bribe government officials.

Chae Yang-ki, president of Hyundai Motor Group's Corporate Planning Division, was the first high-level Hyundai Motor official to undergo questioning since the investigation was made public Sunday with an extensive raid by investigators of Hyundai offices.

Chae was questioned Tuesday, according to Hyundai Motor and the Supreme Public Prosecutors' Office. Also Tuesday, the head of a Hyundai Motor subsidiary, Glovis, was arrested on charges of embezzling company money to create slush funds.

Details of the charges against Lee Ju-eun, the arrested executive, weren't available, but local media reported that his slush funds amount to about 7 billion won ($7.2 million).

Hyundai Motor, which also owns Kia Motors Corp., is suspected of using the secret money to bribe politicians and government officials.

The investigation grew out of a scandal surrounding a jailed lobbyist, Kim Jae-rok, who was arrested last week on charges of receiving money from businesses in exchange for promises he would use his connections with influential figures to win favors.

Hyundai Motor is suspected of paying Kim billions of won (millions of dollars, euros) from slush funds in pursuit of his influence in construction approvals and permits.

According to the Korea Times, investigators are also looking into the legality of the transfer of wealth from Hyunda-Kia Group chairman Chung Mong-koo to his son Chung Eui-son, the de facto owner of Glovis, which is the logistics arm of Hyundai.  This afternoon it was announced the government would not be looking into the wealth transfer at this time.

Associated Press contributed to this report